Questions to Ask Before You Implement Activity Based CostingManagers from companies of all sizes have read about activity-based costing (ABC) or even attended conferences about ABC. Many are now trying to reap the benefits that ABC offers. But the rush to understand and implement ABC has caused some issues to be poorly understood. To summarize these issues, this article identifies some questions people often ask about ABC. Companies that answer these questions before implementing ABC are more likely to have successful ABC systems.

Business Perspective: Who knows about LEAN operations? Who believes processes can cost and save money? In the scope of SYSPRO Workflow Services, we can see, review and improve, manage, and monitor processes' resulting activities and outcomes.

Business Perspective: The role of Enterprise Performance Management (EPM) is to help bridge the gap between strategy and execution by providing a framework in which information can be delivered in the appropriate way and at the right time, so that plans can be reviewed, objective progress assessed, and performance evaluated.

Business Perspective: Businesses today require user permissions, screen management, activity auditing, reporting and compliance to regulatory and internal standards. Their ERP system must be advanced to accommodate these needs without code-and-wait cycles. Simply configure, train and use is our motto for SYSPRO 6.1 the enterprise solution.

After a conversation with a friend, I wondered why corporate illnesses get to a death march? It is the eleventh hour for many companies and they are asking; "how could these things happen?" Who was asleep at the switch? Why did we let ourselves go to this depth? How do our companies get sick and die, come close to death or suffer protracted illness? Why didn't someone let us know there was a cure? Were we not listening?

If someone was allowed to interview the company managers and “Cs” they may have seen they were not doing things to prepare for illness or prevent it from becoming terminal.

Now the real work begins to salvage, if possible, the organization which was so thoughtfully designed, developed, and at a point, well managed.

I think it was a gradual, unnoticeable decline in systems and processes that snowballed into dysfunctional. Enterprise software systems were said to be too difficult to use. Alternate systems, like spreadsheets and databases, were devised to “simplify” enterprise processes. Then those systems became too laborious to manage and were made into even “simpler” enterprise systems so the work could get out and look and feel like “something” was getting done. All the while the real “enterprise software system” was orphaned to menial tasks. When it came time for the owners to demand results, the enterprise software systems and people could not deliver.

In short, they went from an enterprise software system specifically designed to enable paperless and lean operations and processes to a paper only system because the “enterprise software system” had no accurate, reliable knowledge to support business operations. So they devised a paper system which was only validating a single piece of paper at a time, and not getting into the “enterprise software system”. If it was not in front of someone’s eyes, it did not exist. The real shortcoming is none of the alternate systems linked to each other, the “enterprise software system” or anything else. Departmental silos and islands of information is now their “system”. This Resulted in a “blind system” which is costly, incomplete, and unreliable, cannot support business and will not pass audit.

The moral of the story is don’t dumb down your enterprise software systems in the hope of saving money or time. You just might be sacrificing your entire business. Make the systems work and work to make the systems.

Within the Enterprise Software world, lean manufacturing represents a cultural change at all levels of a company. The prime objective of lean manufacturing is to eliminate waste, whatever form that takes. The most obvious examples in the production area might be excess materials in storage, work-in process, and finished product waiting for buyers, but it can also be unnecessary movement of staff and many other processes that do not ‘add value’ to finished items such as setup time.